Analysis of section 372a of companies act 1956 pdf

It is pertinent to mention here that section 186 of the companies act, 20 corresponds to section 372a of the companies act, 1956 and provides for provisions relating to loans and investment by company. This circular will apply till section 186 is notified, and if and when section 186 is notified, there will be again ambiguity as section 186 does not grant exemptions in holding and wholly owned subsidiary cases like section 372a does. Section 372a of the companies act legal service india. Companies amendment bill 2020 detailed tabular analysis. Section 372a of the companies act, 1956, specifically exempts any loans made, any guarantee given or security provided or any investment made by a holding company to its wholly owned subsidiary. All the four transactions are frequently taken place in any company and henceforth the section becomes more important and therefore it requires to special heed by virtue of strict penal provisions and because of no much space to play. Companies act, 1956 bare acts law library advocatekhoj. In a jv company wherein the indian listed company is providing know how and in lieu of that the jv company is allotting shares of 25%. Clarification on section 185 of the companies act, 20.

As per section 295 of companies act 1956, previous approval of central government is required, if any company directly or indirectly1. Basis companies act 1956 companies act 20 commentsremarks 1. All the four transactions are frequently taken place in any company and henceforth the section becomes more important and therefore it requires to special heed by virtue of strict penal provisions and. Guarantee by holding company to banks with regard to its. Whether this will amount to investment under the provisions of section 372a of the companies act, 1956 for the listed company. Let us see in each detail, all the aspects of this section. Companies acts section 185, 186 and 372a ambiguities.

An act to consolidate and amend the law relating to companies and certain other associations. Section 185 an indepth analysis corporate professionals. Group 1 aarti singh, azhar hussain, jyoti nawlani, nemchand meena, renuka sharma companies act. In pursuance to the provisions of section 1861 of the act, a company shall make investment through not more than two layers of investment companies. In pursuance to the provisions of section 186 1 of the act, a company shall make investment through not more than two layers of investment companies. Under the companies act, 20 inter corporate loans and investment plays a. The meaning of the word layer has been stated under section. Main provisions of companies act 1956 presented by. The difference between companys act 1956 and companys act 20 outlined in a typicall manner. Insight on section 186 of the new companies act, 20. Companies act, 20 analysis of important provisions. Mca clarification on section 185 of ca 20 qua section 372a of ca 1956 ministry of corporate affairs has issued a clarification on the contentious section 185 of the companies act, 20 regarding loans made, guarantees given or securities provided vide section 372a of the companies act, 1956. Further, the exemption available from the provisions of section 372a of the 1956 act to private companies as.

Section 372a of the ca 1956 was applicable only to public companies. Lesson 16 intercorporate loans, investments, guarantees and security 5 1862c of the act, 20. Further, the exemption available from the provisions of section 372a of the 1956 act to private companies as well as loans or investment. Loan and investment by company companies act 20 section 186. It also covers the security or guarantee provided for the same. The companies act, 1956 memorandum of association of the federation of indian mineral industries new delhi limited by guarantee and not having a share capital name 1. Inter corporate loans and investments law times journal. Loans to directors section 185 of the companies act, 20 2. Ministry of corporate affairs has issued a clarification on the contentious section 185 of the companies act, 20 regarding loans made, guarantees given or securities provided vide section 372a of the companies act, 1956. Memorandum and articles of association of the guarantor company duly certified to be true and uptodate is enclosed. This act may be cited as the companies act chapter 24. The companies act 20 is an act of the parliament of india on indian company law which regulates incorporation of a company, responsibilities of a company, directors, dissolution of a company. Statement pursuant to section 212 of the companies act, 1956. Mca clarification on section 185 of ca 20 qua section.

Loans and investments in companies act, 20 vivro financial. Companies issue of share capital with differential voting rights rules, 2001 view download. As per settled principle of interpretation, special provision shall prevail over. The issue has been examined with reference to applicability of section 372a of the companies act, 1956 visavis section 185 of the companies act, 20. Applicability of section 372a companies act 1956 abcaus. The 20 act is divided into 29 chapters containing 470 sections as against 658 sections in the companies act, 1956 and has 7 schedules. One of the most significant legal reforms of the country in recent times has been the enactment of the companies act, 20 the 20 act as this was. Mca clarification under section 372a3 of the companies. As per section 231 of the income tax act 1961, person includes.

Section 372a of the 1956 act, governed public limited companies and private limited. Section 186 of the companies act,20 and its comparison. This is the second part of the series, which will focus on the exceptions to the section 297, 299 and 300 of the companies act, 1956. Special offer on gst package for cas as per the mou with icai. Section 372a of 1956 act covers only body corporate, whereas section 186 of the 20 act covers perons and body corporate. Section 372a of the companies act,1956 corporate law forum. Comparison of section 186 of companies act, 20 and. The name of the company hereinafter called the federation is the federation of indian mineral industries. Section 372a of the companies act, 1956 the act deals with intercorporate loan. The intention of both the provisions is by and large identical namely to regulate primarily intercorporate investments and loans.

Analysis of section 372a of companies act corporate. There is no such provision under section 372a of erstwhile companies act, 1956. Provided that the provisions of this sub section shall not affect. Presidents assent on 29 th august 20 law to be operational in phases o 98 sections notified on 12 th september 20 corresponding sections of companies act, 1956 ceased to have effect from that date o no transitional provisions draft rules and corresponding forms issued. Section 372a inter corporate loaninvestmentguarantee. Based upon the above analysis of sections 185 and section 372a of the companies act 1956, even after the effectiveness of section 185 of the new companies act 20, the bank can take the corporate. In pursuance to the provisions of section 1861 of the act, a company shall make. The companies act, 20 has come with a change in the theory of loan and investment by company. Short title, commencement and extent 1 this act may be called the companies act, 1956. Companies act the companies act is a successor to the indian companies act of 19 and is a consolidation of many successive amendment acts, statutory rules and principles laid down in decisions of. Lesson 16 intercorporate loans, investments, guarantees. Companies act 20 vs companies act 1956 the companies act, 20 has been passed by lok sabha as well as rajya sabha and the president has given his consent to the same in august 20. Section 185 of the act, amongst other matters, states that no company shall, directly or indirectly, advance any loan to any other person in whom the director is interested or give any guarantee or provide any security in connection with a loan taken. Section 186 of companies act, 20 loan and investment.

As per section 372a of the companies act, 1956, a company cannot make investment, give loan or guarantee or provide any security in excess of the limits set out therein unless it is previously authorized by a special resolution passed by the shareholders of the company. Section 185 section 185 of the companies act, 20 has been delved upon and to make it comprehensive, the circular dated 14. Draft rules 5th tranche under the companies act 20. The companies act, 1956 existing act contains 658 sections and xv schedules. Be it enacted by parliament in the sixth year of the republic of india as follows 1.

The words save as otherwise provided in this act is to be noticed. Section 295 of company law deals with the loan given to directors of the company. Clarification on section 372a of the companies act, 1956. Section 186 in the companies act 2014 herein after referred to as the act corresponds to section 372a in the erstwhile 1956 act. In this article we shall analyze transactions to which these sections are. The word person has not been defined under the 20 act. To elucidate, this would mean that if anywhere else, i. In this connection, it is hereby clarified that registers maintained by companies pursuant to sub section 5 of section 372a of companies act, 1956 may continue as per requirements under these provisions and the new format prescribed vide form mbp2 shall be used for particulars entered in such registers on and from 1. It is clarified that section 372a of the companies act, 1956 dealing with intercorporate loans continue to remain in force till section 186.

It is a subject matter of interpretation that whether section 186 of the. A company, whether by itself or together with its subsidiaries hereafter in this section and section 373 referred as the investing company, shall not be entitled to acquire, by way of subscription, purchase or otherwise whether by itself. Icai the institute of chartered accountants of india. Companies declaration of beneficial interest in shares rules, 1975 view download. An act to consolidate and amend the laws in force in zimbabwe relating to the constitution, i n corporation, registration, management, administration and winding up of companies and other associations, and for other purposes incidental thereto. Explore them by section wise, view them or download them. The companies act, 20 was passed by lok sabha on the 18th of december 2012 and passed by the rajya sabha on 8th august 20 and is all set to replace the 57 year old companies act, 1956. Companies disqualification of directors under section 2741g of the companies act, 1956 rules, 2003 view download. The ministry of corporate affairs mca vide its general circular no. Lesson 16 intercorporate loans, investments, guarantees and security 1 lesson outline.